Epicor suit claims company is providing third-party support illegally

Epicor is trying to stop Utah IT services firm Applied Integration from providing third-party support for its Dimensions software, alleging that the company has committed illegal acts in the course of doing so, according to a lawsuit filed this month in U.S. District Court for the Western District of Texas.

The suit claims Applied Integration 'illicitly' obtained Epicor's intellectual property in order to sell support services

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Epicor is trying to stop Utah IT services firm Applied Integration from providing third-party support for its Dimensions software, alleging that the company has committed illegal acts in the course of doing so, according to a lawsuit filed this month in U.S. District Court for the Western District of Texas.

Dimensions is a distribution management software system aimed at lumber yards and home centers. "A support contract with Epicor is the only means by which a Dimensions customer may obtain access to programmers able to examine and modify proprietary, copyrighted, and confidential information, including the compiled code of the Dimensions Software, to resolve problems which may arise during a customer's use or operation of the system," Epicor's suit states.

Providing updates and support for the product "necessarily requires reproducing, modifying, altering, publishing, or displaying copyrighted or proprietary information regarding Dimensions Software in a manner Epicor has never licensed to any other party," it adds.

However, AI has "planned and implemented a scheme whereby it monetizes the value of Epicor's proprietary information and copyrights by acting as a vendor of Dimensions Updates and Dimensions Support, despite being unauthorized and unlicensed to do so," the suit states.

AI represents itself as a "legitimate alternative" to Epicor for Dimensions support as well as a close partner of previous Dimensions seller Activant, an ERP (enterprise resource planning) vendor equity firm Apax Partners bought last year along with Epicor in a roughly US$2 billion deal, according to the suit. Neither claim is true, the suit adds.

Some Dimensions users have dropped their Epicor support contracts and instead signed up with AI, which has "illicitly acquired, copied, installed, and run Dimensions Updates on their systems," according to the suit.

AI's owner, Don Cockayne, used to work on Dimensions, and AI has described him as "one of the driving technical forces" behind the software, the complaint states.

"On basis of Mr. Cockayne's former employment with Dimensions, and through other means, AI had access to Epicor proprietary information," including source code and documentation, it states. "At all times Mr. Cockayne has been and remains obligated to hold proprietary Dimensions information in strictest confidence."

There is no way AI could provide the level of support it offers lawfully, according to the suit.

Epicor is suing for copyright infringement, misappropriation of trade secrets and other allegations. It is asking for an injunction against Applied Integration as well as assorted damages.

Reached for comment on Tuesday, Cockayne declined comment and said lawyers for his firm and Epicor are in discussions. "We're trying to see if we can work this out outside of court," he said.

The case bears some parallels to Oracle's lawsuits against former SAP subsidiary TomorrowNow, which offered support for Oracle applications at lower cost.

In November 2010, Oracle won a US$1.3 billion judgment against SAP, which admitted liability for illegal support-site downloads conducted by TomorrowNow. But a judge later tossed out the jury award and Oracle is pursuing a new trial on damages.

Oracle is also suing Rimini Street, where TomorrowNow co-founder Seth Ravin serves as CEO, claiming that the company duplicates TomorrowNow's business practices. Rimini Street has denied any wrongdoing and says it acts within its customers license agreement rights.

On one level, it's no surprise the specter of litigation has grown around third-party support companies, given that annual maintenance fees carry extremely high profit margins for vendors, and keep money rolling in even when new software license sales slow down.

Maintenance revenue is even more important for older software platforms, which may have a stable but fairly static customer base that is eroded with every defection to a third-party support provider.

There's no way to conclude from Epicor's suit whether AI is in the wrong, but "what's extremely disturbing is how vendors are working hard to prevent customers from having third-party maintenance options," said analyst Ray Wang, CEO of Constellation Research, via email. "The notion of perpetual software license rights should include the right to self-support software or engage in a third party to provide tax, regulatory, and additional updates."

"As many vendors try to close up these loopholes, customers are left in a no-man's land position of being forced into de-facto maintenance contracts with only the vendor," he added. "That being said, if AI violated any copyright and IP provisions, this will effectively shut down an avenue of third party support."

End users need to band together and collectively demand clear rights to third-party support options, Wang said. "Otherwise, we have a situation similar to automakers forcing drivers to only go to them for maintenance."

If some of the industry's largest systems integrators actively entered the third-party support market, it would effectively "disrupt the balance of power and put more money into the hands of the end-users and the system integrators," he added.